Minimum wages, globalization and poverty in Honduras

Arbeitspapier

To be competitive in the global economy, some argue that Latin American countries need to reduce or eliminate labour market regulations such as minimum wage legislation because they constrain job creation and hence increase poverty. On the other hand, minimum wage increases can have a direct positive impact on family income and may therefore help to reduce poverty. We take advantage of a complex minimum wage system in a poor country that has been exposed to the forces of globalization to test whether minimum wages are an effective poverty reduction tool in this environment. We find the net effect of minimum wage increases in Honduras is the reduction of extreme poverty, with an elasticity of -0.18, and all poverty, with an elasticity of -0.10 (using the national poverty lines). These results are driven entirely by the effect on workers in large private sector firms, where minimum wage legislation is enforced. Increases in the minimum do not affect the incidence of poverty among workers in sectors where minimum wages are not enforced (small firms) or do not apply (self-employed and public sector). Hence, we show that minimum wages can be used as a poverty reduction tool in the formal sector. However, we do not endorse minimum wages as the best tool as we have not carried out a complete cost-benefit analysis of this policy vis-à-vis others.

Angaben zum Objekt

• ISBN: 978-92-9230-069-2
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: WIDER Research Paper ; No. 2008/23

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Labor Demand ; Wage Level and Structure; Wage Differentials ; Wages, Compensation, and Labor Costs: Public Policy
• Thema: minimum wage ; poverty ; Central America ; Honduras ; Mindestlohn ; Armut ; Honduras

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Gindling, T. H. ; Terrell, Katherine
• Ereignis: Veröffentlichung
• (wer): The United Nations University World Institute for Development Economics Research (UNU-WIDER)
• (wo): Helsinki
• (wann): 2008

Weitere Informationen

• Handle: http://hdl.handle.net/10419/63266
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ